Digital photography retail profit ?

dxqcanada · Feb 21, 2009

I worked in the photographic retail industry many years ago.
We worked on the idea that if we can sell a camera to a customer that they will come back continously to purchase film and get photofinishing.

Our profit margins on the camera hardware was extremely minimal and we made our money on the film and photofinishing.

I was thinking about the Digital photo industry ... and there is no film (yes there are storage cards but these are not one time use) or people have their own printing methods.

I am assuming profit margins are the Camera hardware have been set a lot higher now to compensate ?

ThePhotoRebellion · Feb 21, 2009

From talking with the employees at my local pro camera shop, a lot of these companies are still making nice profits in photo refinishing. The company I'm talking about has 6-8 locations and a strong web presence.

I'm not sure of the profit margins on digital equipment but photographers, Pro and hobbyists, upgrade a lot sooner now than they did 10 years ago.

Big Mike · Feb 21, 2009

A lot of the consumer labs seem to be doing poorly these days. People used to buy film and then pay for processing and prints...which was pretty lucrative. Now, it seems that very few people print their image. It's more likely that they go onto the computer and get shared on Facebook or Myspace etc. Heck, I know several people who have digital cameras and no computer at all...they just look at the images on the camera's screen.

I know that some companies have been trying hard to get people to print their images and use their disposable products. This is one reason they have small photo printers and several that can print directly from the camera. It seems to be a loosing battle though.

I think the big money maker is small digital cameras. It seems to me that people used to buy a 35mm film point & shoot camera and had it for 10+ years...never needing or wanting to upgrade. It might have cost them $100 give or take.

Now, those same people buy a $300 digital camera every two years...and their kids each have their own digital cameras as well. That's where the money is. The small chain store labs try to sell this stuff but they have a hard time competing with big box stores.

ann · Feb 21, 2009

the mark up on hardware is not as much as one would think. At least that is what i have been told by people i trust. I get a professional discount and when it comes to hardware, it is very slim, if any.

The extra's are the "money" makers.

Flash Harry · Feb 22, 2009

I for one will take a lot of convincing that the profit margins are slim, 5 years back an F5 Nikon went for around £1300 over here, this was the dogs b******* film camera, the D300 I bought recently cost roughly the same and the D3 is nearly £3000, D3X £5000, possibly retailers aren't making a fortune but I dont see the majors suffering at these costs, camera internals are pretty much the same, add a sensor and mini computer, quadruple the price and you have a winner. I can buy a decent second hand car for the price of a camera now. H

ann · Feb 22, 2009

there is a difference between what the manufactor makes and what the store makes.

ThePhotoRebellion · Feb 22, 2009

I would like to know the truth about the "profit margin" for electronics.

...take a lot of convincing that the profit margins are slim, 5 years back an F5 Nikon went for around £1300 over here, this was the dogs b******* film camera, the D300 I bought recently cost roughly...

I agree, it's the same with many electronics. For example, Game systems (Ps3, x box, etc.) and even the games themselves, prices haven't changed in 15 years. Tell me, how is that possible?

Who sets the prices for these products?

dxqcanada · Feb 22, 2009

When I was in retail ... the price was set dependent on the following things:

What your competition is selling the same item for.
What you can get away with.
If the manufacturer has negotiated a set price with all retailers.

Generally a manufacturer tries to balance the pricing through all the local retailers ... to stop any dumping / price wars that may occur.

Christie Photo · Feb 22, 2009

How many stand-alone camera shops do you see any more? We had two very nice store in our town (population 35,000). They're both long gone. When department and discount stores began offering a larger and larger selection of photo gear, things got rough. I know at one time the margin was simply the discount they got from paying the invoice early... about 1 1/2%.

Usually these shops sold other stuff... greeting cards and such.

And now, there's the internet.

Anyway, they're mostly gone now. There can't be much $ without real volume buying and selling.

-Pete

andrew99 · Feb 23, 2009

Just a guess, but I imagine camera stores make most of their money from accessories. Camera bags, memory, lenses, flashes, etc.

JCleveland · Mar 5, 2009

I'm a store manager at Black's here in Canada, and the margins on digital cameras as well as camera equipment is very MINIMAL, we definitely make our money on the 'extras' as someone had mentioned.. That bag, filter, lens pens, memory, warranties etc.. PLUS the referrals and repeat customers we generate because we have fantastic customer service and 'perks' so to say, is definitely key.. Black's is also very reliant on our printing, passports, frames and so forth. It seems more people are coming out of their shells about printing their digital files, realizing how simple it is, and how inexpensive it is to do in a lab, as opposed to printing at home! (And how much better a 'pro' lab is compared to wally-world!)

dxqcanada · Mar 6, 2009

Ok, sounds like things have not changed since I was in the business ... except for the volumes of film we sold. There would be no equal consumable item in Digital Photography.

I can see why Camera Stores are closing up.

GwagDesigns · Mar 8, 2009

Just look at Ritz Camera, they filled for chapter 11 recently. We made our money in photofinishing, and those
extended warranties" back when I worked for them, now people are more apt to just buy online for cheaper rather then spend more money in the retail business, where the main concern for the workers is which camera and accessories make them more money.

guitarkid · Mar 18, 2009

Big Mike said:
I think the big money maker is small digital cameras. It seems to me that people used to buy a 35mm film point & shoot camera and had it for 10+ years...never needing or wanting to upgrade. It might have cost them $100 give or take.

Now, those same people buy a $300 digital camera every two years...and their kids each have their own digital cameras as well. That's where the money is.

I agree. There are more people out there going for the nice $300 units every few years then there are the photographers getting the new $2000 bodies every year or two...

holga girl · Mar 22, 2009

i used to work for a pro shop and i often saw the cost on items. the larger a chain, the less they pay for items because they order more. different cameras have a different mark-up. generally speaking, the high end equipment has little to no mark-up, usually around 5-6%, rarely more than 10%.

the cheaper p&s and budget cameras have a much higher mark-up and are considered the 'money makers'. we would always get frustrated when a guy would drop $2k on a camera that we make $35 on, and would want us to give him all of the accessories for free. by the time we paid for rent, lights and employee saleries, it likely cost us money to sell him the camera. it is the guy that buys the off brand crap-tastic cameras that earns the shop a profit.